Business Competitiveness in the PH: A View from the Ground

Filipino competitiveness is not good, it’s great!
James Michael Lafferty




MANILA, Philippines -I was a panelist last week in the Euromoney Philippines Investment Forum along with many dignitaries, including President Benigno Aquino III and Secretary of Finance Cesar Purisima. One of those “standard” questions came up concerning, “What can the Philippines do to improve competitiveness?” I think many people were shocked at how bullish I am on the Philippines. And I am not saying there is nothing to improve upon. It is just that, from my vantage point of leading multinationals in this country, this nation is incredibly competitive! Let me tell a few stories to explain why.

I have worked for some of the biggest and most respected consumer goods companies: Procter and Gamble. Coca-Cola. And now BAT. And on five continents and over 40 countries.

In every country, there are indeed competitors — some local, but typically the ones concerned being other multinationals. Like when I was at Coke, my biggest worry was Pepsi most of the time, not the local cola brand.

There is, however, one nation that stands out. Where the local companies are so good, so well run, that they represent the big competitive risk. And that country is right here, the Philippines!

Let me give some examples.

P&G is the biggest laundry detergent company in the world. By far. And in normal cases, the key competitors are companies like Unilever, or Henkel, as examples. But not here. In my time leading P&G, the leader of the laundry detergent bar segment, which was nearly half of the market, was a great brand called Champion from Peerless. A local company. Well run. A very formidable competitor. They were winning market shares. And they deserved it, doing a better job of delivering real consumer value. I respected them. And they made me better.

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You can see the same in many, if not most, consumer categories. Diapers have EQ, a brilliant local brand. Toothpaste has Hapee. And there are many more: Splash Corporation, Belo Skincare, Alaska Milk — all local Filipino companies that are well run, hyper-competitive, and winning market shares.

I have never seen a market like this. So competitive. So good at turning out world-class companies and talent.

My two favorite examples start with iced tea. I can only imagine if I was a consultant, and a local company came to me and asked, “Do you think we can win if we enter a category dominated by Coca-Cola, Pepsi Cola, Unilever, and Nestle?” My answer would be, “Don’t be crazy, you are taking on four monsters. Go find something else to compete in!”

Well, I am glad my friend Lance Gokongwei and his colleagues at URC never asked me. Because what they did is extraordinary. They entered. They had the unique name, flavors, and distribution strategy of C2. And in a few short years, they took the lead from the big boys. It’s about as impressive a story as there is. In fact, it’s a lot more impressive in my view than the story of Bill Gates starting up in a garage!

Finally, when I retired from P&G and left the Philippines, sadly, for my new role in Nigeria as CEO of Coca-Cola, I met in my first week in Lagos with my top customer, an owner of the largest fast-food chain called Chicken Republic. We were chatting and he asked me where I came from. I answered, “The Philippines.” And I will never forget his answer.

“Oh, my gosh! That’s neat! My hero is a Filipino.”

So I, of course, asked, “Who is that?”

His answer was, “Tony Tan, the founder of Jollibee. And let me tell you why. I am today the biggest fast food chain in Nigeria. But we know McDonald’s is coming. And it is scary, all their money and might and PR. But we have hope. Because somewhere out there in this world, there is a local chain that has succeeded in beating McDonald’s, and keeping leadership. And that is Jollibee.”

I loved it. Even in the middle of Nigeria, the excellence of Filipino business is recognized and cheered.

Nine months later, upon the gracious invitation of Tony Tan and his team at Jollibee, I escorted my Nigerian customer and his team to Manila for a one-week visit with Jollibee to learn. It was a wonderful experience, and the entire group could not say enough good things about Jollibee, their leadership, and their commitment to excellence. It is a great, great company.

I could go on and on. This country has amazing competitiveness. Yes, we can do more. We can continue to truly knock down barriers to free market competition, to level the playing field like was recently done in tobacco, to allow more companies to enter and invest. We can continue to push for investment-grade ratings, to open up more capital markets to our businesses. We can upgrade more infrastructure.  The administration is pushing all the right buttons. Anyone can see it.

And I tell you this: with the amazing base of talent, skill and competitiveness this nation has right now, if we fix these things, it will be downright exciting — and scary to some — how competitive this country’s businesses can be. PHILSTAR 25 March 2013